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The Panama Canal Expansion: A Closer Look At The Canal and Trade Lanes

On June 26th a 9000 TEU COSCO vessel was the first to pass through the expanded Panama Canal. The expansion cost $5.25 billion and began in 2007. The Panama Canal had previously been able to manage ships carrying no more than 4800 TEU. As the global ocean fleets continue to grow in size expansion was necessary to accommodate larger ships. Now that larger ships are passing through the Panama Canal it is estimated that 10% of container shipments originating in Asia will shift from landing on the US West Coast to landing on the US East Coast. While the Panama Canal route from Asia to the US East Coast is a longer transit and does cost more, retail importers landing product on the US East Coast boast decreased port to warehouse expenses. Here’s a breakdown of routes and transit times from Asia to the US.

Brown Brothers Harriman CMU Commodity Markets update December 2015 || Redrawing Global Shipping Routes: The Panama Canal Gets an Upgrade ||

A global shift in shipping patterns is expected in the long term as the macroeconomics ruling global trade remain ever changing. Locally, we are hopeful that smaller US West Coast inland ports equipped to accommodate smaller vessels (maybe even the Port of Portland…) are more attractive than those vessels waiting out the queue to pass through the Panama Canal. As sourcing patterns trend away from China and further into South East Asia, the Panama Canal route is a more direct route to the US, will the US West Coast see more than a 10% cargo reduction? Or, perhaps the mega ships of 18,000 TEUs or more, too large to pass through the Panama Canal, will continue to bolster U.S. West Coast volume and port infrastructure growth?

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